As a manager, you must wear a number of different hats and be proficient at a number of different disciplines. Even if finance is not your thing, there is no way around the fact that good management requires quite a bit of number crunching. To be successful at this, you must learn how to control your department’s costs.
Renegotiate supplier contracts annually. Every time you renew a contract, it is a chance to lower your department costs. Don’t miss out on this opportunity by renewing without renegotiating. Remember that the longer you hold a contract with a supplier, the more negotiating power you might have. Also, avoid multi-year or lifelong contracts; stick to annual contracts to maximize your renegotiation options.
Increase productivity, not headcount. While it may be tempting to hire a new employee for what you see as a new position that could add value to your department, it may be that you can make certain changes to increase the productivity of the employees you already have, rather than take on a new hire. When it comes to increasing employee productivity, consider all of your resources–technology, training, revised job descriptions, team building, etc.–to find those that are best suited to your circumstances, and best able to fit into your budget. Sometimes something as simple as job scheduling software can give you a better perspective in terms of staffing and workflow.
Recruit only high-quality employees. It’s understandable that you should be eager to fill an open position if your workforce seems to be temporarily lagging because of an employment gap. However, hasty hiring can equate to a weak workforce. Invest in the process of recruiting only high-quality employees, and marketing your employer brand to attract the best employees out there. It will be well worth the time and money for you to find employees that better your business and stick with you for the long haul.
Create an annual budget. Take ample time and consideration to device a budget–each and every year–that accounts for both your current circumstances and your goals for growth. When you create an annual budget, you have the opportunity to reassess your overhead spending, identify areas of needed improvement, and discover worthwhile investments that can better your department. Make it a point to examine control reports (income statements, industry news, finance news, balance sheets, etc.) frequently, in order to determine when, and in what ways, your budget might not be working.
As a manager, controlling department costs may be one of your most difficult and complex responsibilities. Keep these considerations in mind when it comes to streamlining the process and ensuring your greatest success.
Management 101: How to Control Your Department's Costs
